Navigation Links
Globalized economy more sensitive to recessions
Date:10/18/2010

By applying the same rules that explain how genomes evolve, Rice University physicists have shown that the world economy is more sensitive to recessionary shocks and recovers more slowly from recessions now than it did 40 years ago, due to increased trade globalization.

Their findings are available online and will appear in an upcoming issue of the Physical Review Letters.

"Standard economic theory suggests that trade networks with a more modular structure tend to recover more slowly from recessions, but using evolutionary theory we predicted the opposite, and U.N. trade data indicate we were right," said Michael Deem, the John W. Cox Professor in Biochemical and Genetic Engineering and professor of physics and astronomy at Rice.

Deem and co-author Jiankui He, a graduate student in physics and astronomy, studied United Nations trade data from the past 40 years and found the global economy has tended to react more sharply to recessions and to recover more slowly from them as globalization has increased.

The concept of modularity is key to understanding their findings. In biology, a module is a structure that is part of a larger system but can also function partly on its own, in much the same way that a modular piece of furniture might function either by itself or as part of larger ensemble. In living things, modularity is rampant at every scale -- from the genomes inside cells to the organs in human bodies.

In 2007, Deem and former postdoctoral fellow Jun Sun offered an explanation for biological modularity. They showed that modularly arose spontaneously in systems where evolution occurred relatively slowly and where information -- like genes -- could be swapped.

"What we showed in 2007 was that under certain conditions, a changing environment leads to the development of a modular structure," Deem said. "We considered the world trade network to be an evolving system, and we know information in the form of business practices is readily swapped throughout the trade network. Since it matches the conditions for our theory, we hypothesized that it would also follow the same physical rules."

To test their idea, He and Deem had to create a mathematical description of the global trade network. Scientists often use a tree-like structure to study networks -- much like a geneologist might use a family tree to describe family relationships. By applying a tree-like geometry to the U.N. data, Deem and He computed a variable called the "CCC" that described the amount of modularity in the global trade network for any given year. In a "flattened" global economy, CCC is low, and it increases as modularity in the trade network increases. Examples of increased modularity could include protectionist tariffs or regional trade associations, each of which acts to restrain trade between countries.

"Another of our predictions was that recessions would cause the world trade network to become more hierarchical, and this is something that was borne out by the data as well," Deem said. "With increasing globalization, we see the CCC trending down since 1969, but we also see it increasing, for a brief period, after each recession."

Deem and He found the trend held true for three major recessions and four minor ones over the past four decades.


'/>"/>

Contact: David Ruth
druth@rice.edu
713-348-6327
Rice University
Source:Eurekalert

Related biology news :

1. Nanoscale coating protect products -- and the economy
2. Rise or fall of reef fish driven by both economy and ecology
3. Saving the economy and saving the planet
4. Synthetic catalyst mimics natures hydrogen economy
5. EPA awards competitive grants for students to design sustainable technologies that help environment and economy
6. Improved adhesive for products like transparent tape could benefit biofuels economy
7. Rebuilding flood plains, agriculture, economy
8. For insulin sensitive overweight patients, 1 session of exercise improves metabolic health
9. Sensitive nanowire disease detectors made by Yale scientists
10. Caltech scientists engineer supersensitive receptor, gain better understanding of dopamine system
11. Sensitive laser instrument could aid search for life on Mars
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:6/2/2016)... 2, 2016   The Weather Company , an IBM ... an industry-first capability in which consumers will be able to ... ask questions via voice or text and receive relevant information ... Marketers have long sought an advertising solution that ... be personal, relevant and valuable; and can scale across millions ...
(Date:5/16/2016)... --  EyeLock LLC , a market leader of iris-based ... IoT Center of Excellence in Austin, Texas ... embedded iris biometric applications. EyeLock,s iris authentication ... with unmatched biometric accuracy, making it the most proven ... platform uses video technology to deliver a fast and ...
(Date:4/28/2016)... , April 28, 2016 First quarter 2016: ... up 966% compared with the first quarter of 2015 ... SEK 589.1 M (loss: 18.8) and the operating margin was 40% ... 0.32) Cash flow from operations was SEK 249.9 M ... revenue guidance is unchanged, SEK 7,000-8,500 M. The operating ...
Breaking Biology News(10 mins):
(Date:6/23/2016)... Md. , June 23, 2016 A person ... from the crime scene to track the criminal down. ... the U.S. Food and Drug Administration (FDA) uses DNA evidence ... Sound far-fetched? It,s not. The FDA ... sequencing to support investigations of foodborne illnesses. Put as simply ...
(Date:6/23/2016)... 23, 2016   EpiBiome , a precision microbiome ... in debt financing from Silicon Valley Bank (SVB). The ... to advance its drug development efforts, as well as ... "SVB has been an incredible strategic partner to ... traditional bank would provide," said Dr. Aeron Tynes ...
(Date:6/23/2016)... BEACH, Calif. , June 23, 2016  Blueprint ... new biological discoveries to the medical community, has closed ... co-founder Matthew Nunez . "We have ... us with the capital we need to meet our ... will essentially provide us the runway to complete validation ...
(Date:6/23/2016)... ... 2016 , ... Velocity Products, a division of Morris Group, ... exclusively for Okuma CNC machining centers at The International Manufacturing Technology Show, IMTS, ... companies with expertise in toolholding, cutting tools, machining dynamics and distribution, Velocity SMART ...
Breaking Biology Technology: